Commentary
Rob Myers, operations director at the Lloyd’s Market Association (LMA), looks at what firms should prioritise when planning for 2025.
At this time of year, many of us spend a lot of time costing and operationalising our priorities for the year ahead.
As a market association, our job at the LMA is to read through individual firms’ requirements and understand what big projects will be occupying (or should be occupying) everyone in the market. These are the areas where we will spend our time trying to support, share ideas, synthesise opinions and bring together best practices for the benefit of all managing agents.
For me, there are three such universal imperatives that will cut across the whole market over the coming year.
The first is the need to (re)define and unlock the long-dangled prize of ‘better, faster, cheaper’ that Blueprint Two was set up to deliver. In the first quarter of the year, the Blueprint Two programme team needs to engage with their customers to reconfirm what phase two should be about, because the current vision came from work done over three years ago.
In three years, the world has moved on hugely. Today’s AI capabilities didn’t exist three years ago, for example. Nor did the range of enhanced underwriting methods practised today, supported by a rising tide of innovative electronic trading offerings.
In some market sectors, I expect to see more challenges to the centralised processing approach that has served us for decades from emerging, ‘proof of concept’ business processing solutions. This could appear in the form of payment capabilities being appended to electronic trading solutions and/or compression of elapsed processing timescales.
If business is transacted peer to peer using Acord global standards, the centralised processing model has a job to do in restating the enhanced value it can provide as the de facto standard for all Lloyd’s business.
I look forward to robust debates and an interesting outcome to this important discussion in the first half of next year.
The second market-wide trend that I predict with confidence for next year is stronger advocacy for definition and adoption of data standards across the risk placement process. This is simply based on an ever-increasing understanding that data is an invisible but essential part of our business models.
There are three parts to any insurance contract: the negotiation, the placement and the post-event accounting/claims settlement. At the moment, there is no established standard for sharing data across the three parts of this conversation, bridging (as PPL CEO John Mason so eloquently put it recently) “rich” trade data and transaction data processing.
Each area has a different language, when, really, they should all speak one. The current system brings challenges, whether for underwriters who want to adopt the new enhanced lead/follow models or for brokers who want to flow client data right across from negotiation to placement and subsequent administrative processes.
Models such as Acord’s ADEPT and Web Connectivity solutions are beginning to show quite clearly how data can flow from broker to underwriter without complex intervening systems and this begins to make adoption of digital trading start to seem a real possibility.
As everyone sees how the benefits could play out, there will in 2025 be a real push for shared data standards, to support a data-first trading environment.
Finally, I need to talk about an LMA-driven priority that should come to fruition in 2025. Our delegated authority fieldwork from three years ago identified computable contracts as a cornerstone for modernisation of this (growing) segment of Lloyd’s business.
We have started the work to establish the Computable Binding Authority Agreement as the bedrock contract of delegation to which all underlying risk declarations will attach.
In 2025, the LMA will complete the first refresh in 10 years of the catalogue of approximately 170 binding authority agreements, wordings and clauses. Through this process, we are also creating the ‘digital object’ twin of the updated analogue wordings we have been used to for many decades. These will be accessible in a digital wording objects library and a new contractor creator tool the LMA (working with Limoss) will sponsor through 2025, expecting targeted launch early in 2026.
We expect this to enable re-use of contract data in risks attaching to these binders, smarter validation and simplification of downstream processes.
Next year has the ambition and potential to be pivotal in the quest for digitisation of market processes – the end of the beginning, hopefully, and the dawn of a new age of impactful data-first innovations.